TORONTO (Reuters) - Canadian miner Iamgold Corp IAG.N (IMG.TO) said Friday it agreed to buy gold exploration company Trelawney Mining TRR.V for about C$585 million in cash, in a move aimed at expanding its asset base within politically safe jurisdictions.
Toronto-based Iamgold, whose largest operations are located in Suriname and Burkina Faso, said the deal offers Trelawney's shareholders a 42 percent premium and gives it control of the company's attractive Côté Lake gold project in northern Ontario.
The acquisition also allows Iamgold to effectively redeploy cash proceeds from the sale of non-core assets into a project that enhances its future production profile.
Last June, Iamgold sold minority interests in the Tarkwa and Damang gold mines in Ghana to Gold Fields Ltd (GFIJ.J) for $667 million in cash.
At the time, Iamgold said it intended to use the proceeds to fund exploration and expansion work, along with "accretive bite-sized transactions."
"The acquisition of Trelawney creates a larger and more geographically balanced portfolio of long-life gold assets for Iamgold," said Chief Executive Steve Letwin in a statement.
Côté Lake, a large-tonnage low-to-medium-grade gold deposit, is believed to hold about 930,000 ounces of gold in the indicated category and 5.9 million ounces of inferred gold.
"This project has the potential to become a large bulk tonnage operation, with significant economies of scale at competitive cash costs," Iamgold Chief Operating Officer Gordon Stothart said in a statement. "I'm excited to have this asset as part of our portfolio."
Iamgold's inferred resources will increase by 95 percent and measured and indicated resources will rise by 5 percent after the deal, the mid-tier gold miner said in its statement.
The gold miner, which has operations in North America, South America and Africa, had production from continuing operations of 896,000 ounces in 2011.
Iamgold said the transaction has been unanimously approved by the boards of both companies and Trelawney has advised its shareholders to vote in favor of the deal.
Iamgold's financial adviser on the deal was GMP Securities and its legal adviser was Fasken Martineau DuMoulin LLP, while RBC Capital Markets acted as Trelawney's financial adviser and Stikeman Elliott LLP acted as its legal adviser.
Reporting By Euan Rocha in Toronto and Aftab Ahmed in Bangalore